The stock market indexes remained in the green Tuesday, despite dipping in the last hour to near the lows of the day. Treasury Secretary Janet Yellen's words comforted investors about the banking system, while shares of First Republic Bank rallied.
The Federal Reserve starts its second policy meeting of 2023 on Tuesday.
The CME FedWatch Tool now sees an 83% chance of a 25-basis-point rate hike at Wednesday's conclusion of the Fed meeting. Nearly 17% of those polled expect no change in rates.
The 10-year U.S. Treasury yield rose 9 basis points to 3.57%.
Yellen said the U.S. government could step in to guarantee deposits if necessary if the banking crisis worsens. She spoke to the American Bankers Association earlier today.
Stock Market Action
The Dow Jones Industrial Average reduced its gain to 0.4%. The S&P 500 rose 0.6%. The Nasdaq composite also gained 0.6%. The Russell 2000 jumped 1.6%, as it benefited from a rebound in its regional banks.
NYSE and Nasdaq volume was lower than at the same time on Monday.
The S&P 500 neared the 50-day moving average before backing off. The Nasdaq held above its 50- and 200-day moving averages. The Nasdaq 100-tracking Invesco QQQ Trust ETF rose 0.3%.
The Innovator IBD 50 ETF fared better than the major stock market indexes, up 1.1%.
Crude oil added 1.1% to $68.52 per barrel. Bitcoin futures edged up 1.1% to $28,255.
European stocks rose, with the German DAX gaining 2% and the Paris CAC gaining 1.8%. The London FTSE added 1.9%.
Stock Market Today: Breaks Out
Kentucky Derby operator Churchill Downs rose 1.9% and broke out of a flat base. Shares are in the 5% buy zone from the 253.39 buy point to 266.06. But volume is below average, which is a negative sign for the breakout.
Shares got a boost Monday after Trust initiated coverage with a buy rating and 300 price target on the stock. CHND's relative strength line hit a 52-week high, as indicated by the blue dot on the MarketSmith chart.
Darden Restaurants rose 1.6% and broke out of a flat base with a 152.18 buy point. Shares are in a buy zone to 159.79. Volume was weak in this move to new highs. Raymond James reiterated its outperform rating on the stock with a 160 price target. The Olive Garden parent company reports fiscal Q3 earnings on Thursday.
Switzerland-based athletic shoe company On gapped up over 27% after reporting over 91% Q4 net sales growth and forecasting current-quarter net sales growth of 61%.
"After a great year and exceptionally strong fourth quarter well beyond our own expectations, we are heading into 2023 with a lot of momentum and in a position of strength," said Martin Hoffmann, co-CEO and CFO.
ONON shares broke out and passed the 24.21 buy point of a cup-with-handle base, according to MarketSmith pattern recognition. The relative strength line hit a 52-week high.
Foot Locker spiked 7% after reporting better-than-expected Q4 earnings and sales late Monday. The athletic gear and shoe retailer gave lower adjusted full-year EPS guidance than analysts projected. CEO Mary Dillon said the company has "revitalized" its relationship with Nike and will concentrate on basketball and the sneaker culture. It expects to see positive results later this year.
Nike shares rose 1.7%. Nike reports fiscal Q3 earnings today after the market close.
Meta Platforms rose 0.7% after Morgan Stanley upgraded the stock to overweight from equal weight and raised its price target to 250 from 190. Facebook-parent Meta is an IBD Swing Trader stock. It remains in buy range from a 197.26 buy point.
Banks Still In Spotlight, See Some Relief
First Republic Bank surged over 38%. The Wall Street Journal and others reported that JPMorgan Chase is advising the bank on strategic alternatives, including a capital raise or a sale. The move puts the stock on pace for its largest increase on record, according to Dow Jones Market Data.
Shares of JPM rose 2.7% as banks bounced back.
Regional bank Western Alliance jumped 16.7% on the banking news.
The SPDR Select Regional Bank ETF reclaimed 5.2%. The SPDR Select Financial ETF gapped up 2.4%.
Canadian Solar popped over 14% in heavy volume after the company reported better-than-expected Q4 EPS and sales early Tuesday.
Industrial technology and engineering company Emerson Electric gained 1.8% after Morgan Stanley upgraded the stock to overweight from equal weight and increased its price target to 96.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
